Bill Clinton on Tax Reform

President of the U.S., 1993-2001; Former Democratic Governor (AR)

Restrain spending AND raise taxes to reduce debt

The debt is projected to grow to 100% of the GDP by 2021 and almost 200% by 2035. [The choices we face are]: restrain spending below current projections, raise taxes, and grow the economy faster. We have to do all three.

We have to invest more in
21st-century infrastructure--in faster broadband, a modern national electrical grid, more well-distributed clean-power generation, modernized water and sewer systems, ports and airports, trains, roads, and bridges. We'll have to do a better job of
educating and training a higher percentage of our people to fill the best jobs.

The Simpson-Bowles Commission recommended lowering the corporate tax rate and eliminating most of the deductions and credits that allow many very profitable companies to
avoid a large percentage of the taxes they would otherwise pay, while others pay the legal maximum of 35%. The 35% rate is now the second-highest among wealthy nations, but the actual amount paid on corporate income is 23%, ranking us in the middle.

Cutting taxes for the rich hurts deficit and future

Q: What is it that Democrats and Republicans don't understand about how to make the economy work again?

A: Republicans believe that if you cut taxes, especially for upper-income people, that's always going to work, no matter what it does to
the deficit and to our investment in the future. The republicans can't be completely allergic to taxes. The Democrats can't be completely allergic to changes in health care delivery.

Source: Time Magazine on "Back To Work" book tour by Bill Clinton
, Jan 21, 2011

2000: Vetoed abolition of the Marriage Tax

It was a longstanding inequity in our income tax code that an unmarried couple filing separately pays less than a married couple filling jointly. We would have to draw down some of the federal budget surplus to pay for abolishing the "Marriage Penalty
Tax," but what a good use for the surplus.

Now that we no longer had to spend enormous sums to counterbalance the former Soviet Union, it was time to do constructive things with our hard-won surplus.
Both parties overwhelmingly supported fixing the marriage penalty.

President Clinton also vetoed the Marriage Tax Relief Reconciliation Act of 2000, calling it "poorly targeted and one part of a costly and regressive tax plan that reverses the
principle of fiscal responsibility that has contributed to the longest economic expansion in history." He was right, and most Republican senators agreed privately that he was right.

Reneged on promise to address "forgotten middle class"

One of his most contentious disagreements with the press was his pledge early in the campaign to cut the taxes of the "forgotten" middle class--those making less than $80,000/year--by 10%.
He continued to promote the idea even when he knew it was unworkable after hearing new deficit projections in August. As late as a week before Election Day, he said he would "absolutely not" consider postponing the tax cut.
But afterward, when reporters pressed him at a news conference, he unwisely flashed his anger, claiming that "the press thought the most important issue in the race was the middle-class tax cut.
I never did meet any voter who thought that." Reporters rebuked his coverage to aides, some of whom began calling NBC the "Nail Bill Clinton" network.

OpEd: Broke campaign promise by tax rise & no spending cuts

Tim Penny was a Democrat from Minnesota whose frustration with Washington politics reached a tipping point when Pres. Clinton proposed a big tax increase with few spending cuts, going against his own campaign promise. Tim had enough with empty Washingto
Tim's response to Bill Clinton's about-face actually cost the good people back home, but very quickly Tim took on a kind of folk-hero status--in Congress, in Minnesota, and across this great land. His stature grew enormously, simply because he
took a stand. He was disillusioned with Clinton's plan, and with a political system that seemed bound to support it; more to the point, he didn't like how Clinton promised one thing and then went out and did another, so he stood against it.

My tax cut is the sacrifice of all of us

The Republicans protected my tax cut at all costs while withholding promised funding to the Leave No Child Behind Act, leaving 2.1 million children behind, cutting 140,000 unemployed workers out of their job training programs, 100,000 working families ou
of their child care assistance, and worst of all, while cutting 300,000 poor children out of their after-school programs, when we know it keeps them off the streets, out of trouble, in school, learning, going to college and having a good life.
They protected my tax cuts while dramatically raising the out-of-pocket costs of health care to our veterans and weakening or reversing very important environmental measures, from clean air to forest protection. Now everyone in America had to sacrifice
except the wealthiest Americans. And almost all of us, from Republicans to independents and Democrats, wanted to be asked to do our part, too. But all they asked us to do was to expend the energy necessary to open the envelopes containing our tax cuts.

Never thought I’d be so well cared for by the Republicans

For the first time when America was in a war footing in our whole history, they gave two huge tax cuts, nearly half went to the top 1 percent of us. When I was in office, on occasion, the Republicans were kind of mean to me. But as soon as I got out and
made money, I became the most important group in the world to them. It’s amazing. I never thought I’d be so well cared for by Bush and the Republicans. I almost sent them a thank you note for my tax cuts, until I realized you were paying the bill for it.

Source: Speech to the Democratic National Convention
, Jul 29, 2004

Republican tax cut was too big & too bloated

I vetoed the Republican tax cut because it was “too big, too bloated,” and put too great a burden on America’s economy. Under the budget rules, the bill would have forced large cuts on education, health care, and environmental protection. It would have
prevented us from extending the Social Security trust funds, & from adding a prescription drug benefit to Medicare. We were going to have a surplus this year of about $100 billion, but the proposed GOP tax cut would cost nearly $1 trillion over a decade

Source: My Life, by Bill Clinton, p.870
, Jun 21, 2004

Proposed raising taxes on rich even if no revenue increase

President Clinton at one point proposed raising taxes on the rich although it did not appear that it would increase the tax revenues received from them. A substantial proportion of the public said they favored higher taxes on high-income earners even is
that did not increase the total taxes such people paid. The effect would not be to help anyone else but merely to pull down the better off. The motivation can only be envy, and it is surprising that so many people would admit harboring that emotion.

Bush tax cuts are fiscally irresponsible in long run

The Bush administration insisted on passage of the tax cuts before anyone knew what our income was going to be, what our expenses were going to be, or what emergencies we might face. In fact, our income went down, our expenses went up, and we had
a terrible emergency. Also, these tax cuts have too little stimulus in the short run and too little fiscal responsibility for the long run, with too many of the benefits going to the wealthiest Americans, who don't need them.

Source: Crossroads, by Andrew Cuomo, p. 38
, Oct 14, 2003

1980: Broaden tax base or we have to cut services

After his 1980 defeat for reelection as governor, he appeared to a joint session of the legislature: "We pay less taxes than the people in any other state in the Union, not to mention the District of Columbia.
Accordingly, we are at the bottom in the level of public services in nearly every category, from teacher salaries to higher education to unemployment compensation.
There is but one answer--broadening the tax base--and the state will have to come to it, sooner or later, meantime settling for the barest minimums in services expected in the American society."

Looking back at his first term, he reflected: "I had hoped in my first term as governor that I would be able to make a dramatic difference, but the economy finally caught up with us."

OpEd: 1993 budget included mostly progressive taxation

Clinton's 1993 budget included a largely PROGRESSIVE tax proposal which fell disproportionately on the wealthiest people in the country. 90% of the total tax increase fell on the UPPER 4%, those people then earning $100,000 a year or more. Only the top
1.2% saw an increase in income taxes. In fact, as a result of a substantial increase in the earned income tax credit included in that budget, 20 million low-income families, saw a DECREASE in their federal taxes. For the middle class, there was almost no
tax increase at all. Certainly not $1,000 a head as the ad implies.

Unfortunately, there WERE elements of regressive taxation in that proposal, including a 4.3% increase in the gas tax. That's about $30/year, not much but still regressive in that it
hits the average working stiff who travels 100 miles a day to and from work. Clinton also increased the amount of taxable Social Security income. That hike affected the upper 13% of Social Security recipients, many of whom live on only $44,000/year.

Across-the-board tax cuts are irresponsible

Some [of our political opponents] are offering a strategy they have offered before: an across-the-board tax cut bigger than we can afford. If implemented, it will either explode the deficit, raise interest rates, & slow the economy; or if it is paid for,
it will require even bigger cuts in Medicare, Medicaid, education, and protection of the environment than the budget I vetoed. Either way, it will reduce opportunity, slow the economy, and ultimately hurt hard-working Americans. It is not responsible.

New Covenant for Economic Change: middle class tax cuts

In a speech on November 20, 1991, Clinton tried to present both a broad vision and a specific plan. He called it "A New Covenant for Economic Change." He spoke at length about his investment ideas and proposed a middle-class tax cut to be paid for with
higher taxes on the rich. "In a Clinton Administration, we'll cut income tax rates on the middle class: an average family's tax bill will go down 10%, a savings of $350 a year. And the deficit won't go up--instead those earning over
$200,000 a year will pay more."

Clinton did not merely cast the middle-class themes as wise social policy or smart political choice.
He raised them to the spiritual level. "These are not just economic proposals," he said, adding the immodest assertion, "they are the way to save the very soul of our nation." The speech drew modest attention.

Refused pledge for middle-class tax cut

On December 6, in focus groups in New Jersey, the significant finding was the dog didn't bark. When the moderator in the discussion asked the participants to name Clinton's campaign promises, no one mentioned the middle-class tax cut.
When asked about it directly, the voters, who were middle class, said they did not expect it. Some of them accurately recalled that in one of the debates Clinton had refused to make a flat pledge to cut middle-class taxes.
Many also indicated they did not think such a tax cut would be good policy. It was clear too that these people wanted to make some sacrifices if they believed the problems of the country were being faced.
A tax cut seemed too much of a quick fix and sounded like a Reagan and Republican idea.

Clinton's economic plan would have a stronger appeal if everyone was asked to contribute something to the recovery effort.

Increase taxes on top 1.2%; and on no one else

Because the deficit was so large and because they benefited from tax cuts in the 1980's, we did ask the wealthiest Americans to pay more to reduce the deficit. So on April 15th, the American people will discover the truth about what we did last year
on taxes. Only the top 1.2% of Americans, as I said all along, will pay higher income tax rates. And no one else will. And that is the truth.

Of course, there were, as there always are in politics, naysayers who said this plan wouldn't work.
But they were wrong. When I became President, the experts predicted that next year's deficit would be $300 billion. But because we acted, those same people now say the deficit is going to be under $180 billion.

Our economic program has helped to
produce the lowest core inflation rate and the lowest interest rates in 20 years. And because those interest rates are down, business investment and equipment is growing at 7 times the rate of the previous 4 years.

Raise taxes on income over $200K; reduce taxes under $60K

Q: At what income level can families be guaranteed no tax increase?

CLINTON: The tax increase I have proposed triggers in at family incomes of $200,000 and above. Those are the people who, in the 1980's, had their incomes go up while their taxes went
down. Middle-class people, with incomes of $52,000 and down, had their incomes go down while their taxes went up in the Reagan-Bush years because of six increases in the payroll taxes. So that is where my income limit would trigger.

Q: So there will be
no tax increases below $200,000?

CLINTON: Notwithstanding my opponent's ad, my plan triggers in at gross family incomes of $200,000 and above. And then we want to give modest middle-class tax relief to restore some fairness, especially to middle-class
people with families with incomes of under $60,000.

BUSH: Clinton also says he wants to raise $150 billion. Taxing people over $200,000 will not get you $150 billion, [especially] when you add in his other spending proposals, regrettably.